Startup helps SaaS vendors boost sales, customer experience

Media Inquiries: Contact Karen Budell, CMO

Media Inquiries: Contact Karen Budell, CMO

A startup called Totango is hoping to make it big by solving the business problems of fellow SaaS vendors, not end users.

Every software company has to deal with the cost of acquiring a customer -- running ads, paying salespeople, and maybe a few wine-and-dine evenings to close the deal -- before they make anything in fees.

But SaaS vendors have the added challenge of increased customer "churn," or turnover, since their products are sold by monthly or yearly subscription. Customers who aren't happy with the product usually don't have to wait too long before they get the chance to end the relationship, and it's generally easier to switch SaaS products than it is with on-premises software.

Also, many SaaS companies have adopted "freemium" pricing, an evolution of the traditional 30-day free trial, wherein a limited version of the software can be used at no cost in perpetuity. Then it's up to the SaaS vendor's salespeople to upsell those freemium users to paid editions of the product.

Totango's SaaS platform, which went into public beta Thursday, gives SaaS vendors detailed, real-time information about the way end users are interacting with their software, both before and after the sale.

As a result, sales teams can focus on freemium users who seem to be using the system most aggressively, and product teams can figure out which features may be frustrating or not resonating with paying users.

Totango's instrumentation layer tracks "meaningful business events" going on with a client's SaaS application, such as when a user opens a document or shares a file, said CEO Guy Nirpaz. "It's not necessarily technical events, such as the number of page views."

The Totango system doesn't collect any personal information from users, he said.

One early user of Totango's system gave it high marks.

"In SaaS one of the biggest pains is churn," said Sharon Vardi, who used Totango while serving as vice president of marketing at project management software vendor Clarizen.

Information supplied by Totango can help "customer success" staffers spot potentially unhappy users, said Vardi, who recently became vice president of marketing at Cloudshare, which provides tools and services for moving applications to the cloud. "You can pick up the phone or get online with these people to figure out what the problem is."

Clarizen could have developed its own utilities for tracking application usage, but that would have taken time and effort away from its core product, he said.

Totango's public beta should run through the end of this year, according to Nirpaz. Pricing for the service hasn't been determined yet, he said.

Also Thursday, the company announced a $3.8 million Series A funding round led by Pitango Ventures and Gemini Ventures.

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